In this interview, Matthew Beecham talked with Connie Hamblin, corporate secretary and vice president, investor relations and corporate communications, Gentex Corp, about the company’s Rear Camera Display and SmartBeam products and what else we can expect to see packaged into the rearview mirror.
just-auto: Gentex is forecasting an increase of 30 – 35% in the third quarter of 2010 compared to the third quarter of 2009. What are the reasons behind this stronger forecast?
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The company’s revenues are expected to increase by 30-35% in the third quarter of 2010 compared with the third quarter in 2009, due to increased unit shipments of the company’s auto-dimming rearview mirrors, and particularly new programmes with higher value-added advanced features, such as the Rear Camera Display (RCD) and SmartBeam products.
The RCD Mirror contains a liquid crystal display (LCD) that works with a video camera mounted at the rear of the vehicle to provide a view directly behind the vehicle while backing up. When the vehicle is shifted into ‘reverse’, a display appears automatically through the auto-dimming mirror’s reflective surface.
The display disappears when the vehicle is shifted into any other gear, a capability that is made possible utilising Gentex’s ‘transflective’ coating and lighting techniques, which result in a bright, high-resolution color image.
SmartBeam uses a miniature camera-on-a-chip combined with algorithmic decision-making to automatically operate a vehicle’s high beams in order to optimise their usage according to surrounding traffic conditions. The system maximizes forward lighting while eliminating the repetitive task of turning the high beams on and off manually. SmartBeam is integrated into a Gentex auto-dimming mirror, which automatically darkens to eliminate glare from the headlamps of vehicles approaching from the rear.
just-auto: To what extent do you see your latest innovations— including your camera-based active-safety systems such as Smartbeam and the RCD Mirror—adding to your business fortunes over the next quarter?
We have not provided guidance specifically related to the contribution that SmartBeam and RCD will make during the third quarter. We do expect that the growth of the company over the next several years will primarily be driven by sales of both RCD Mirrors and SmartBeam.
just-auto: As we understand it, Gentex expects project shipments of its RCD rearview camera display system to nearly double this year, compared to last year’s 573,000 units. What have been the factors helping demand? e.g. legislation, ease of installation, etc.
To date, the decisions to offer RCD Mirrors on the 51 vehicle models at eight different automakers have been market driven, and the decisions were made prior to any pending legislation. We are now in a phase where automakers are working to make plans for how they will respond to the National Highway Traffic Safety Administration’s (NHTSA’s) interpretation of the Kids Transportation Safety Act of 2007.
That legislation will require automakers to outfit all vehicles in the United States with some sort of rear visibility enhancement, which could be achieved by utilising camera-based systems, with the display in the rearview mirror, the navigation system or some other multi-purpose display in the instrument panel or centre stack, or other sensors, additional mirrors, etc. NHTSA is currently scheduled to provide its preliminary interpretation of that legislation, which will be subject to public comment, in mid-November, with the final interpretation to be published in approximately February 2011. Automakers will have four years after the final rule is published to ensure that all vehicles in the US comply.
just-auto: While popular in the US, to what extent is your RCD gaining momentum in Europe?
We just announced our first two RCD Mirror programmes in Europe: we are now shipping auto-dimming rearview mirrors with the RCD feature for the 2010 Toyota Corolla sedan and Toyota Auris family hatchback sold in European and other overseas markets. The Auris is one of the first European Union-built vehicles to offer the RCD feature specifically for the European markets. The Gentex RCD Mirror is offered as optional equipment on multiple trim levels of both the Corolla and Auris. In addition, both models continue to offer base Gentex interior auto-dimming mirrors as standard equipment on some trim levels.
We believe that consumers in Europe will utilise RCD Mirrors primarily for parking assist, given the narrow roads, limited parking and different driving habits in markets outside of the US.
just-auto: We also understand that you are expecting SmartBeam shipments to increase by 40% this year from 437,000 units last year. Where is the demand coming from?
We continue to make progress with automakers as they more broadly offer SmartBeam across their product lines. SmartBeam, introduced in the 2005 model year, currently is offered on 51 vehicle models at nine automakers, including Audi, BMW, Chrysler, General Motors, Opel/Vauxhall, Tata Motors/Land Rover, Toyota/Lexus, Rolls Royce and Volkswagen. We recently announced 16 new vehicle models at Audi and Volkswagen that will now offer SmartBeam, and we expect to announce a number of additional vehicle models for existing and new customers during the 2010 calendar year.
just-auto: Gentex has shipped more than 1.5 million SmartBeam units since the feature debuted in the US in the 2005 model year and in Europe the following year. Carmakers are now using vehicle speed, yaw and pitch as well as steering sensors to control headlamp patterns and the direction the beams are pointing. What about the use of cameras to directly see and analyse the road ahead? Beyond the automatic dipping of the main beams, how close are we to seeing the application of the more advanced SmartBeam VFL variable forward lighting and DFL dynamic lighting systems?
We currently expect that we should be able to announce new programmes for VFL in the next year or so, and the DFL should follow within a year of that. The adoption of VFL is contingent upon the adoption rates of newer headlamp technology, such as LEDs. We also expect that we will be able to announce initial programmes for other camera-based driver-assist features, such as lane departure warning, collision avoidance, etc., over the next two to three years.
just-auto: Electro-Chromic glass is a good application for rearview mirrors, and you also supply dimmable windows to Boeing for commercial airliners. Would the technology ever catch-on for, say, automotive roof glass?
The technology could catch on for automotive roof glass, but it would likely be in very low volume, primarily due to the cost. We have been asked to make prototype electrochromic sunroofs for very expensive concept cars, but we work to stay focused on our core products and business. Gentex’s business model is built around the company developing high tech products that consumers want, providing them in high volume at a low cost to the customer.
just-auto: Turning again to your business with Boeing to supply dimmable windows, I guess this window technology could be used on private jets, too. What are you ambitions for dimmable windows in the aircraft market and for architectural applications?
The dimmable aircraft windows are already being shipped for the Hawker Beechcraft King Air 350, which is a business jet. We are working with PPG Aerospace to offer our dimmable aircraft windows to other business jet manufacturers as well as other commercial aircraft manufacturers.
We believe that applications for architectural glass are still a number of years out, since there are a number of hurdles that still need to be overcome. The primary issue for all of the technologies out there is cost/square foot versus the expected pay-off in energy savings. We continue to work to develop products in this area, and have the added benefit that improvements in the chemistry for the dimmable windows are applicable to the chemistry that we use for our auto-dimming mirror products.
just-auto: As we understand it, Gentex has gradually moved from a second-tier supplier of mirror pieces to a first tier supplier of the complete featured unit. What impact on your organisational structure and bottom line growth has that had?
Gentex has historically been a Tier 1 supplier for the majority of its interior mirror product line, and is a Tier 2 (by choice) supplier for its exterior auto-dimming mirrors. Over the past several years we did convert one large European customer from a Tier 2 on interior mirrors to a Tier 1 mirror with a number of advanced electronic features. We believe that change is a good example of Gentex’s agility and ability to change, and it also illustrates the company’s ability to stylishly design and incorporate features into its rearview mirrors.
just-auto: What else can we expect to see packaged into either the exterior or interior auto-dimming rearview mirror? EC safety legislators, for example, may well mandate collision warning indicators which would seem to require similar camera technology to SmartBeam. What else might we expect to see in future mirror systems?
Gentex
is working to develop a number of different camera-based features and displays for both interior and exterior mirrors. Some of those features may include microelectronics products, including complementary metal oxide semiconductor (CMOS) imager design, components and optics, as well as sensing cameras and video. In addition, we are working on camera algorithm applications such as lane keep assist, collision monitoring, driver awareness monitoring, blind spot detection, backup obstacle detection and warning, intersection monitoring and safety warning, fusion with GPS and fusion with radar.
just-auto: The auto-dimming mirror market has shown phenomenal growth. What are the prospects for this application in emerging markets?
We believe that there are very good growth prospects for our product in China, and we’re already shipping our product there through a number of the large automotive joint ventures. We are currently working to supply the domestic Chinese automakers as well. We also currently ship to Eastern Europe and South America in small volumes, but currently do not ship to India due to the prevalence of small entry-level vehicles in that market.
just-auto: Could you give us a hint at some of the other automotive and non-automotive technologies or features Gentex is working on which show potential for long term revenue and profit growth?
The products mentioned above that we are working to develop have potential for long-term revenues and profit growth. We currently believe that our Rear Camera Display and SmartBeam products will drive the company’s growth over the next several years.
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